2024 banking and capital markets outlook

Table of contents

• Key messages

• Navigating the changing contours of the global economy

• Forces shaping the future of the B&CM industry

• Retail banking: Fortifying customer relationships and owning a greater share of wallet

• Consumer payments: Grabbing a bigger slice of the revenue pie in a fast-evolving ecosystem

• Wealth management: Revamping the advice engine for the future of wealth

• Corporate and transaction banking: Enabling efficient money flows through digitization

• Investment banking and capital markets: Rejiggering business models and leading with cutting-edge technology

• Market infrastructure: Reinventing business models and becoming more indispensable to clients

• Endnotes
  

Key messages

• A slowing global economy, coupled with a divergent economic landscape, will challenge the banking industry in 2024. Banks’ ability to generate income and manage costs will be tested in new ways.

• Multiple disruptive forces are reshaping the foundational architecture of the banking and capital markets industry. Higher interest rates, reduced money supply, more assertive regulations, climate change, and geopolitical tensions are key drivers behind this transformation.

• The exponential pace of new technologies, and the confluence of multiple trends, are influencing how banks operate and serve customer needs. The impact of generative AI, industry convergence, embedded finance, open data, digitization of money, decarbonization, digital identity, and fraud will grow in 2024.

• Banks, in general, are on sound footing, but revenue models will be tested. Organic growth will be modest, forcing institutions to pursue new sources of value in a capital-scarce environment.

• Investment banking and sales and trading businesses will need to adapt to new competitive dynamics. Forces like the growth of private capital will challenge this sector to offer more value to both corporate and buy-side clients.

• Early 2023 shocks to global banking have galvanized the industry to reassess their strategies. While bank leaders focus on proposed regulatory changes to capital, liquidity, and risk management for US banks, there is much to be done to evolve business models.